Don’t look now but EUR/NZD seems prime for a breakout! The pair has been consolidating inside an ascending triangle pattern on its 1-hour forex chart for the past few weeks and might be ready to pick a direction anytime soon. Stochastic is pointing down while the 100 SMA is below the 200 SMA, suggesting that the path of least resistance is to the downside. A break below the triangle support around the 1.7700 major psychological level could spur a 600-pip selloff, which is roughly the same height as the chart formation. Similarly, an upside break past the triangle resistance at the 1.7900 major psychological level could lead to a 600-pip climb. Better review our lesson on How to Trade Triangles if you’re hoping to catch a breakout move!
Finally a bit more action on EUR/GBP! After consolidating tightly inside a short-term forex range for nearly a month, the pair made a breakdown and indicated further downside momentum. This could put the pair on track towards testing the bottom of the longer-term range around the .7000-.7050 psychological levels. However, stochastic has already reached the oversold area while the 100 SMA is still safely above the 200 SMA, indicating that buyers might stay on top of their game. In that case, a bounce back to the top of the range at the .7360 level might be in the cards. If you’re looking to short this pair, just make sure you set a wide stop past the range resistance or wait for an actual test of that level.
Think the trend is your friend? Then you might like this rising channel setup on NZD/USD’s 1-hour forex time frame. The pair is currently testing the channel support around .6325 and might be due for a bounce back to the top, which is near the .6500 major psychological resistance. Stochastic is already climbing out of the oversold region, reflecting a pickup in buying pressure, while the 100 SMA is above the longer-term 200 SMA. Price could encounter a bit of resistance at the mid-channel area of interest near the .6400 major psychological level on its move up, as this nearby ceiling could still keep further gains in check.
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To get the complete picture and avoid getting blindsided by economic data, you also have to do your fundamental analysis. Lucky for us, Pip Diddy fills us in on what we need to know about fundamentals with his Daily Forex Fundamentals.